China Great Wall: Cost Increases Coexist with Expectations of Loose Quotas, Nickel Prices Expected to Remain Rangebound in the Short Term.

China Great Wall released a research report stating that the Indonesian Minister of Energy and Mineral Resources had previously mentioned that the plan to impose windfall taxes on coal and nickel exports was still under discussion and the original start date of April 1st for implementation would be postponed. As conflicts continue, it is necessary to continue monitoring the progress of the windfall tax. Nickel has been fluctuating between long-term oversupply and short-term supply chain vulnerabilities. Indonesia has been dynamically adjusting nickel ore supply through RKAB, and the declining ore grade in Indonesia has also provided logical support for nickel prices. Overall, the downside space for nickel prices is limited, and short-term fluctuations are likely to be dominant. The main viewpoints of China Great Wall are as follows: The key lies in Indonesia: Rising costs and expectations of loose quotas coexist Last week, the price of solid sulfur in Indonesia increased by 21% month-on-month, and the price of Indonesian MHP rose slightly by 0.2%. The Indonesian Minister of Energy and Mineral Resources mentioned earlier that the plan to impose windfall taxes on coal and nickel exports was still under discussion, and the scheduled start date of April 1st would be delayed. As conflicts continue, it is necessary to continue monitoring the progress of the windfall tax. In terms of quotas, on March 31st, the Indonesian Ministry of Energy and Mineral Resources (ESDM) stated that approximately 150 million tons of nickel ore production permits have been approved in the 2026 RKAB, and the final approved production volume is expected to exceed 150 million tons. Rising fuel costs will further solidify cost support, while macro pressures still exist. On the macro level, according to CME, the probability of the Federal Reserve maintaining interest rates unchanged at the April 29th meeting is 99.5%, and the probability of a rate cut within the year remains low, putting some pressure on overall metal prices. On the cost side, the increase in fuel costs will further solidify cost support. As of March 30th, fuel prices in the Philippines were close to doubling before the US-Iran conflict. In Indonesia, on April 2nd, the Indonesian Presidential Palace officially confirmed that the state-owned oil company, Pertamina, will not adjust the subsidized and non-subsidized fuel prices; stabilizing domestic fuel prices in Indonesia may make it possible for subsequent windfall taxes. In terms of demand, according to Mysteel, crude steel production in the 300 series in April was 1.8967 million tons, a decrease of 0.22% month-on-month and an increase of 3.97% year-on-year. Risk factors include lower-than-expected downstream demand, unexpected release of overseas mining supply, macro policy risks, and potential lag risks in some data in the report.